Guidelines in Defending OEM against Trademark Non-use in China

The validity of trademark use in the Original Equipment Manufacturer (OEM) process in relation to non-use cancellation has been a topic of considerable debate. This is primarily due to the nature of OEM use, which often involves merely affixing the trademark without local sales, leading to questions about its ability to identify the source of goods in China.

Recent developments have clarified this issue. The Beijing High Court's Guidelines for Reviewing Trademark Prosecution Cases, effective April 24, 2019, along with the Trademark Examination Guidelines from the China National Intellectual Property Administration (CNIPA), effective January 1, 2022, have established a consensus that OEM use can indeed defend against non-use cancellation.

Despite this clarification, many OEM trademarks continue to face cancellation due to non-compliance with CNIPA requirements.

Case 1 –(2020) Beijing 73 Xingchu 12868 Administrative Judgment

In this case, registrant Yueqing Ouqi attempted to demonstrate the use of the disputed trademark in manufacturing and exporting. The CNIPA initially canceled the trademark for several reasons, including the lack of dates on submitted evidence and the absence of a customs seal on export contracts. However, upon appeal, the registrant provided additional documentation, including sales contracts and customs declarations, which the court found sufficient to establish a complete chain of evidence. Consequently, the court overturned the CNIPA's decision and upheld the trademark registration.

Case 2 – (2021) Beijing 73 Xingchu No. 9359 Administrative Judgment

In this instance, Chung Foo Building Materials sought to prove that it had engaged a Chinese manufacturer to produce goods bearing the disputed trademark for export. The CNIPA canceled the trademark, citing insufficient evidence of actual use. Upon appeal, the registrant submitted a comprehensive array of documents, including contracts and shipping records, which the court deemed adequate to confirm valid use of the trademark.

Analysis and Recommendations

Both cases illustrate a common theme: after the CNIPA's cancellation decisions, registrants successfully appealed by presenting additional evidence that formed a cohesive narrative. A key takeaway is that the initial evidence submitted to the CNIPA often lacked the necessary interconnections to establish a complete chain of proof.

To enhance the chances of successfully defending OEM trademark use, I recommend that registrants take the following steps:

1. Maintain Comprehensive Documentation: Keep a variety of documents generated during manufacturing and export, such as purchase agreements, commercial invoices, packing lists, and customs declarations.

2. Incorporate Trademarks in All Relevant Documents: Ensure that trademarks are clearly indicated in all transaction-related documents, particularly purchase agreements and invoices, rather than solely on product packaging or promotional materials.

3. Utilize Official Customs Documentation: Leverage official documentation from Chinese Customs, as this carries significant weight in proving use.

4. Create a Consistent Evidence Chain: Use the same order and invoice numbers across all documents to establish a coherent evidence chain.

5. Obtain Company Seals: Request that relevant parties, such as manufacturers and freight agents, provide company seals on their documents, as signatures alone may not suffice.

6. Translate Non-Chinese Documents: Provide Chinese translations for any documents not originally in Chinese to ensure clarity and compliance.

7. Notarize Electronic Evidence: For electronic communications, consider regular notarization and, if necessary, legalization to bolster their credibility.

By following these guidelines, registrants can better position themselves to defend their trademarks in the OEM context and navigate the complexities of trademark law in China.